County's health plan gets a reprieve County's health plan gets a reprieve (June 23, 2004)

By Renee Batti
Almanac News Editor

County supervisors have agreed to continue San Mateo County's managed-care health plan for Medi-Cal patients, even though its existence prevents the flow of about $7 million to $9 million in federal funding to San Mateo Medical Center, the county's hospital.

The June 1 decision ended the limbo created by a resolution the Board of Supervisors passed in March that authorized jettisoning the health plan -- a move that could have made the delivery of health care to the county's Medi-Cal patients more difficult.

Although the managed-care plan, called the Health Plan of San Mateo (HPSM), is considered an effective and cost-efficient mechanism for managing Medi-Cal care in the county, supervisors and hospital administrators have been frustrated by a provision of a state law that prevents the hospital from receiving federal funds given to every other public hospital in the state, said Supervisor Rich Gordon.

The federal funds, estimated at $7 million to $9 million, are not available because of a "weird nuance" in the funding provisions that penalizes the hospital for having created the health plan to deliver Medi-Cal care more efficiently and broadly, according to Nancy Steiger, the county hospital's CEO.

"It's fundamentally wrong that we don't get these funds," she said.

She and Supervisor Gordon said county officials are working with state administrators and leaders, including Sen. Jackie Speier, D-Hillsborough, to change the provision blocking payment to the county hospital.

Even as the supervisors authorized ending HPSM in March, they left the door open to continue searching for a way to save it before adoption of the county's 2004-05 budget. The governor's "May Revise" budget proposal recommended additional money for HPSM, offering county officials needed encouragement to continue the health plan for at least another year.

The governor proposed a 3 percent rate increase for the state's five County Organized Health Systems, including HPSM, and it is likely that the increase will be included in the adopted budget, county officials say. The increase would boost revenue to the hospital, through the health plan, by about $2 million.

As a precaution against an unexpected development in Sacramento, the board authorized the county manager to rescind the action "at any time during three consecutive 90-day periods" beginning July 1.

The hospital has faced serious financial problems for a range of reasons, including a fast-growing patient load of uninsured residents and the "under-reimbursement" from the state for the cost of caring for Medi-Cal patients.

The county has plugged the hospital's budget gap from its reserves for several years, but as its budget continues to shrink, that option is becoming less feasible.

Some county officials have talked about possibly closing the hospital to stop the flow of red ink, but that is an outcome the supervisors hope to avoid.

Closing the hospital would not mean the county could walk away from its state-mandated responsibility to ensure that the uninsured have access to medical care. It would have to contract with other medical services to provide care, but county leaders have long held that the best and ultimately least expensive way to deliver high-quality health care to the uninsured and those on Medi-Cal is to operate its own hospital.

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